The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1887-09-16
EXPERT ACCOUNTANTS.
A GLASS OF DETECTIVES OF WHICH
THE PUBLIC KNOW LITTLE.

PrOfesslOn-HOw Hiuucn rrauus Aro
Detected-Impossiblo for u Dishonest
Booklkceper to Cover All Traces.
Murder isn't half so sure TO come out as Is
fraud In financial transactions. There Is
comparatively small but exceedingly indus
trious and shrewd class of men whose
business II is to run down such frauds. 1t Is
the class Of so called expert accountants.
better name for them would be business OK
aminers In such cases rs the recent Ives
collapse the whole responsibility of arriving
at the absolute condition Of affairs often rests
n1gith one or more of these accountants. On
their Investigations is based the whole action
in much important litigation. They have
framed the motto Of the famous detectives
"We never Sleep" to the more cogent phrase
"We never fail.n
An old accountant, one who has been I'D
the business thirty years, recently gave no
some interesting facts. One OF the things
about the discovery Of fraudulent money
transactions such as embezzlements and
forgeries by trusted employees, that strike.
the unbusiness mind rs peculiar, is TINT tht
swindler, himself having exclusive charge OF
the books and being adroit enough to stca'
for n considerable time and Mt the same TINS
conceal evidence of his thefts OH the books
should leave OH them patent TO the expert
record Of his crime
"Why does he not destroy all evidence OF
the fraud, so that, when he is gone, 1t VIII 5e
rs undiscoverable MS it was while he con-
Quoted the swindlel" / asked the veteran ex-
pert, "Can he remove all trace OF his criminal
operations"
"No,n said the accountant; "it is absolutely
impossible for dishonest bookkeeper, for III
stance, and his opportunities are by far tho
best, to so cover up his thefts that an expert
cannot discover them. That is, unless oil tho
books and papers are destroyed which is
proof positive of fraud on its face"
"Well why is that truel"
"To answer that question l must give you
an idea Of the whole business OF expert ac-
counting. 1t is not difficult 20 comprehend.
but very difficult and very tedious to do some
times. In the first place, there are only two
AInethods of stealing: Method No. /, abstract
ing goods OF money without record; No. Z,
doing the same with record and classifying tho
accounts by failing to acknowledge moneys
received for goods sold or for stocks, OF other
wise Let us take this case No. 3 first. The
accountant being convinced that the accounts
are falsifed or Il balance forced, that is,
made to appear where there is none, proceeds
In this why:
"He first compares the cash Oh hand at the
time of the examination with the balance
shown on the books. IL this balance is cor
rect, the next step is to trace specimen entries
by means of returned checks, which, of
course, are never destroyed. For example,
il certain cashier receives from a debtor
check for $500 and no entry is found on the
cash book, by applying to the debtor the OK
pert finds whether the debtor received n re-
turned $500 check Endorsed by the defaulter
on the day when the swindle is supposed to
have taken place. An affirmative answer
from the creditor is, of course, sure clew.
But If the books have been kept so that tho
cash is right to all appearances and yet the
accountant finds that some defacation must
exist because of the difference shown by the
trial balance, he very frequently discovers
that shipments have been made and no cop
les of bills retained, nor entries of them put
down. He ut once compares the original
shipping receipt books with the original entry
of soles, or checks them off, as we call it,
Uere again, of course, il there is any dis
Ireoancy or omission, we have positive proof
of sharp practice.
"Swinding method No. ], by receiving
ash and keeping no entry at ALL is generally
practiced by bunglers, or men who become
dishonest through force of circumstances.
Nearly always such frauds are revealed in one
or two ways; either by means Of false adj
ditions or by supplying fictitious accounts
False additions, of course, are easily dis
covered. Where fictitious accounts are used
The expert often has great difficulty in un-
/ fraQunutly
have found on ledgers the names OF fictitious
firms credited with money and charged with
small amounts Of goods, whereas the actual
shipments were to some bona fide firm and
yor much larger amounts In this case the
expert can only find out by extensive letter
writing to whom goods were shipped on that
date. The firms can tell, Of course, by their
books, whether they received goods Of the
sort in controversy about the time Of the fic-
titious shipments Sometimes, however, it
involves an almost endless amount Of inquiry,
running through all sorts of complicated dis
honesty, to get the whole skein Of such frauds
I'm hand. But exposure is inevitable sooner
or later. The swndler can falsify his trial
balance so that to casual observer the books
will appear straight But he cannot so falsify
all the books, vouchers and cash records in
volved as to ultimately elude the detective
ability of an expert accountant"
"How long does it ordinarily take to
straighten out books where there is a fraudr
"That depends altogether on the shrewdness
with which the fraud has been perpetrated.
Some accounts can be Strengthened out in two
weeks. Others take many months. / have
worked nine months on tangled set of ac-
counts. The work always involves an i'm
mense amount of reference. 1t is necessary
in many cases to go through several years Of
bookkeeping item by item. Great numbers